Before looking at the current situation, it is worthwhile briefly reviewing the historical background of this type of protection.

The history of utility model protection must be regarded as starting with the German Law of June 1, 1891. German Patent Law at the time (and indeed up till 1978) required that for patent protection an invention must not only be new but represent a technical step forward in the art [technischer Fortschritt]. This requirement left minor inventions such as those relating to tools and implements which were practical and useful, but did not represent a technical step forward in the art, without protection. Hence the need for a new law which provided limited protection for simple devices but did not protect methods or compositions. Within fifteen years Japan, whose Intellectual Property Laws, and indeed whose entire Civil Law System, was largely modeled on that of Germany, followed suit. There were, however, from the beginning significant differences between the German and Japanese Laws. In Germany protection was initially relatively short (three years) and rights were granted fairly promptly without examination whereas in Japan protection was always for a longer period than in Germany but, until the end of 1993, examination was required as to whether the application for protection met the standards required by the Law. Another difference was that for most of the century the German Patent Law contained no specific requirement for an inventive step for patentability, the Patent Office and courts simply inferring that such a step was required by the fact the patents were to be granted for "inventions". Thus, as a practical matter it was possible for different standards of inventiveness to be applied to consideration of protection for patentable inventions and those protected only by a utility model.[6]

In Japan the statute itself spelled out the difference in that to be patentable something must be a “highly advanced creation of technical ideas” whereas for protection as a utility model all that is required is “creation of a technical idea utilizing natural laws”. Thus, the determining factor as to whether something was capable of protection by a patent or rather than by a utility model was whether the idea was "highly advanced". The Japanese Patent Office therefore examined utility model applications looking for a measure of inventiveness, but a lower one than was required for patents.[7] This led to the possibility that if one failed to convince the examiner that a sufficient degree of inventiveness had been demonstrated to permit patent protection, the application might, in cases where the subject matter was appropriate, be converted into one for a utility model. This feature was copied in other systems where different degrees of inventiveness were required for patent and utility model protection.

One of the raisons d’etre of the German Law namely the fact that utility models did not have to show technical advance became moot with the adoption of the European Patent Convention in 1978. In harmonizing its patent law with those of the rest of Europe, Germany gave up its requirement for technical advance. This harmonization also required Germany to give up a feature that was regarded as being important by many in the German profession and industry, namely the six month grace period in respect of publications by an inventor. However, no European harmonization existed for utility models and Germany was therefore permitted to retain a grace period for this form of protection. The existence of this grace period gave utility model protection in Germany a new lease on life and lead to a broadening of the concept of what could be protected by utility models from articles having a defined shape or structure to all tangible items including chemicals and electrical circuits. Thus, today the only form of invention which is not protectable by a utility model in Germany is one which is a process or method. Even this limitation was cut back in 2005 when the German Supreme Court held that use claims, including second medical use claims were permitted in utility model applications.[8] Many of the new laws which have come into effect over during the 1990’s borrowed this concept from Germany.